What is a Trust?

A trust is a legal relationship set up by a donor under which one or more persons (the trustee) holds property (often under a written instrument) for the benefit of one or more others (the beneficiary).  People are motivated to create trusts for various reasons:

          1.  To provide for management of assets both before and after death as part of a comprehensive estate plan;

          2.  To protect the beneficiary by giving control of the trust fund to the trustee and by limiting the beneficiary's rights to receive income and principal;

          3.  To To assure stand-by protection in the event of illness or disability;

          4.  To help reduce administrative and probate costs and delays at death; and

          5.  To reduce income or estate taxes by transferring to another both the benefit and tax liability of certain property.


When should you Create a Trust?

      You should create a trust only when there is a need and when the economic benefit justifies it.  You may want to create a trust to meet specific lifetime purposes, such as:

          1.  To relieve yourself of the burdens of asset management;

          2.  To formulate a flexible estate plan;

          3.  To avoid disclosure of assets in probate;

          4.  To finance a child's education;

          5.  To support an elderly parent or special needs child; and

          6.  To shift income and tax liability for a limited or extended period of time.

Who Should be the Trustee?

     One of the most difficult tasks in the creation of a trust is choosing the right trustee or trustees.  You may choose as your trustee or trustees that you trust and will carry out your goals.  You should name a successor trustee in case a trustee should cease to serve.  The trustee should be available to the beneficiaries to discuss the management and administration of the trust assets as well as the needs and objectives of the beneficiaries.  The trustee has a fiduciary duty to abide by the terms of the trust and to act in the best interest of the trust. 




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